The Chapter 11 filing by the biggest US toy store chain, to restructure $5 billion of long-term debt, is among the largest ever by a specialty retailer and casts doubt over the future of the company's 64,000 employees and almost 1,600 stores, which remain open.
Toys "R" Us, the Wayne New Jersey-based toy retailer, has 1,600 Toys "R" Us and Babies "R" Us stores around world, which are continuing to operate as usual.
"Toys R Us' bankruptcy is a reminder that what we are going through right now in retail is not an evolution, but a real revolution", said Roger Beahm, executive director of the Center for Retail Innovation at Wake Forest University School of Business.
If the current pattern of bankrupt or struggling big-box retailers holds true, the Winston-Salem Toys R Us and Babies R Us stores are likely to survive the first round of store closings, if any occur, since they are the only ones serving Northwest North Carolina.
The company said the proceedings are a way for Toys "R" Us to work with its creditors on restructuring the debt beleaguering it. The company said separate operations outside the US and Canada are not part of the filings and its online sales sites worldwide remain open for business.
The filing - just the latest in a string of high-profile bankruptcies this year - comes on the heels of the all-important holiday shopping season, which can account for half of retailers' annual sales.
"Plath said that while Toys R Us should be able to weather the upcoming holiday shopping season, he's not optimistic it will be able to make the adjustments necessary to survive long term".
Retailers of all kinds are struggling, including Sears Canada, which has since closed more than 60 of its locations across B.C., laying off thousands of employees.
Lego said it would keep working with Toys R Us during its bankruptcy "to ensure an optimal solution is reached" for continued Lego sales and "balancing our commitment to them while responsibly managing our business".
However, Toys R Us has been slow to embrace online sales, particularly after a partnership with Amazon dissolved earlier in this decade. Like so many retailers that find it harder to co-exist with Amazon, analysts say Toys R Us needs to improve its online services and offering special experiences in the stores.
TORONTO _ Mastermind Toys is shrugging off the challenges that have beset the retail sector with plans to open more stores this year.
Meanwhile, children are increasingly gravitating towards digital toys rather than physical trinkets, he added.
"For many children, electronics have become a replacement or a substitute for traditional toys", Saunders said. And they say the company should have also thought of new ways to attract more customers in its stores, such as hosting birthday parties. Marc Rosenberg, a toy marketing executive, said it hasn't been aggressive about building its online business, and let those sales migrate to rivals. USA toy sales rose 6 percent last year on top of a 7 percent increase in the prior year, according to NPD Group Inc., a market research firm. That was the biggest increase since 1999 and was fuelled by several blockbuster movies.
But for the first half of 2017, sales rose three per cent. And the nation's two largest toy makers, Mattel and Hasbro, reported disappointing second-quarter results.
The company's filing came in U.S. Bankruptcy Court for the Eastern District of Virginia in Richmond. "All gift cards, warranties and returns will continue to be honoured as normal as will all other customer programs including the Baby Registry, "R" Club™ loyalty and wishlist program and the company's philanthropic commitment to communities across Canada".
In a separate statement late Monday, the company said its online sales sites worldwide remain open for business during the court-supervised process.